US expats give up passports in record numbers
The number of US tax taxpayers giving up their passports or green cards has reached record levels, according to the Treasury Department.
In 2016, 5,411 US expats surrendered their passport which is a 20% increase on 2015’s record figure of 4,279.Tax experts say that the rapid growth in the numbers of US expats giving up their citizenship comes when the Internal Revenue Service and US Treasury are becoming increasingly proactive in tracing undeclared income and assets held abroad by American taxpayers.
The organisations are also enforcing the Foreign Account Tax Compliance Act (FATCA) more effectively and insisting that expats file their reports of foreign bank and financial accounts.
Several bodies representing US taxpayers say Americans who are living overseas are now increasingly aware of their obligations to report their tax to US authorities and some are finding it increasingly difficult to bank in foreign countries because of FATCA.
Also, the Treasury is required by law to publish a list of individuals every quarter who have renounced their US citizenship and in the last tranche of names, one which stands out is Boris Johnson, the current Foreign Secretary of the United Kingdom and former Mayor of London.
Election campaign promise to repeal FATCA
Meanwhile, various US expat groups are urging President Donald Trump to keep his election campaign promise to repeal FATCA and make an announcement about doing so soon.
The unpopular tax reporting laws were introduced by President Barack Obama and they compel US citizens to reveal their foreign bank accounts or be fined for not doing so. Foreign financial institutions must also reveal data on their US clients.
Also, US expats are being reminded that they may be eligible to claim child tax credit while living overseas but there are rules about the $1,000 benefit.
However, they must decide between child tax credit or their foreign earned income exclusion; because of a recent law change, they cannot claim both.
Thousands of expat jobs could disappear from London
A financial think tank is predicting that thousands of jobs – many of them held by expats – could disappear from London’s legal and financial worlds when Brexit is finalised.
Breugel says that once Brexit takes effect, around 20,000 jobs in London’s legal, accountancy and consultancy occupations as well as 10,000 banking jobs will disappear, with employers heading to other European Union cities.
Among the cities that could benefit is Dublin, where English is the main language and the country has a fast-growing economy and a flexible labour market.
Apparently, the number of expats looking for jobs in Ireland began to rise after the UK’s EU referendum and is continuing to grow.
Paris launches campaign to attract employers and expats
Meanwhile, Paris has launched a campaign to attract employers and expats to the city where representatives from the financial services industry are now regularly conducting presentations to employers in the City of London.
Among the incentives for expat execs to make the switch to Paris is the offer of a top rate of 20% for income tax, compared with the UK’s top rate of 45%.
In addition, the rents for offices are around one third of the price of London’s rents, with huge areas of empty office space currently available.
Improved expat mortgage calculator revealed
An improved online mortgage calculator for expats has been unveiled, which will give them a guide to their loan options.
The calculator from Skipton International enables an expat to calculate how much they would be able to borrow for buying property and have a mortgage approved in principle.
Skipton’s director of lending, Nigel Pascoe, said: “This upgrade of the first mortgage calculator for British expats will speed up the early stage when considering a mortgage by giving a clear idea of what a customer can realistically expect to borrow and repay every month.”
Meanwhile, British expats living in France will be able to access a new euro SIPP (Self Invested Personal Pension) which has been launched by finance firm Alexander Beard.
The product has been created by the firm’s French operation in conjunction with a leading pension providing platform.
Where will your money go furthest in retirement?
Expats looking to retire overseas may decide to spend their twilight years indulging and relaxing in a better destination than their home country.
Now the International Currency Exchange has ranked some of the best destinations offering value for money for expat retirees.
The survey acknowledges that the process of deciding where to spend retirement can be a daunting one.
Now the firm has analysed data from numbeo.com and looked at a number of other factors to see where an expat’s money will go furthest.
Their findings reveal that the islands of Corfu and Lanzarote offer the cheapest property and better winters for expats looking to relax.
In their poll, the number one reason for retiring overseas for 76% of respondents was better weather.
In addition, those working in London they can save around 90% by buying property in those destinations rather than in the capital.
The firm also reveals that expat retirees can save more than 50% on their utility bills for heating, electricity and water which helps to boost the islands’ appeal as a retirement hotspot destination.
Expats wanting to live in a city could opt for the Portuguese capital Lisbon which offers the best value of all the cities that were analysed; expats will save around 80% buying a property there rather than in London.
The next best cities for expats in the table are Orlando and Panama City.
However, 57% of those who were questioned said healthcare was one of their top five most important factors and they were looking for excellent levels of medical treatment and care in their new home country.
Meanwhile, a survey by International Living reveals that US expat retirees on a limited income would be best advised heading to Cambodia for its low cost of living, followed by Nicaragua and Peru.
Expat professionals leave Abu Dhabi
As Abu Dhabi’s economy begins to decline there is a growing number of expat professionals leaving for other destinations.
The emirate has been a top destination for lucrative expat positions for many years, particularly in banking and the oil industry.
But since the price of oil fell, the government has brought in austerity measures and the cost of living is rising.
Even citizens employed by the country’s investment authority have had to begin paying their own utility bills, which can be more than $20,000 a year, and they must also pay for their medical expenses.
One recruitment expert interviewed by the Financial Times says that the worst year for three decades was 2016 – which he described as ‘a nightmare’.
He said that expats at the top and bottom of various industries are now leaving Abu Dhabi and in doing so are leaving behind a ‘squeezed middle’ which was a similar experience in the 1980s and ‘90s.
The headhunter said that well-paid European general managers are now being replaced by employers there by much cheaper staff after the expat professionals left Abu Dhabi.
Brexit could lead to a surge of British expats
A financial think tank says that austerity and Brexit will lead to a surge in British expats heading for opportunities overseas.
The prediction comes from the Institute for Fiscal Studies which says that the tax burden under Brexit for the country will reach a 30-year high and lead to deeper austerity and spending cuts.
There could even be new tax laws introduced which would affect British nationals and foreign expats working in the UK.
However, the result of a larger tax grab will see expat professionals and retirees heading overseas with university educated young professionals said to be increasingly concerned about the problems they face in buying property and having to deal with high rents who could lead them moving overseas.
In other financial news…
Expats and foreign tourists to the UK may be asked to pay for their hospital treatment from April under new moves to crack down on ‘medical tourism’. The government says growing numbers of patients from overseas are seeking free treatment which they must now pay for.
Expats heading to Oman on a visitor or family visa are being reminded that they cannot look for work while in the country. Those who are discovered face being made to leave the country and then having to apply for a formal employment visa before returning.
The Union of Consumer Co-Operative Societies in Kuwait has revealed that they will no longer be employing expats and will look to employ citizens instead. The organisation has revealed that there’s now an agreement in place to attract and train Kuwaitis and offer contracts with better salaries over the coming months.
The German government has unveiled plans to restrict EU expats from claiming child benefits. The finance ministry says they will adjust payments in line with the living costs of the expat’s home country though the law will need to be approved by the country’s Parliament first.
The Gulf Co-Operation Council has confirmed that VAT at 5% will be introduced across the six-nation zone from January next year. The move to boost tax revenues will see the UAE generating around Dh12 billion – $3.3 billion – or 0.9% of the UAE’s gross domestic product from the move. However, some economists are warning that the imposition of the tax may not be straightforward since companies will need training and the collection system will be complex.
